“This restructuring is the best path forward for Red Lobster," says CEO Jonathan Tibus.
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Red Lobster, the prominent United States "casual-dining" seafood restaurant chain, has filed for bankruptcy after weeks of mounting speculation and the reported closure of almost 100 of its locations.
The company has now confirmed it has secured over $100 million in financing, and has entered into a so-called "stalking horse agreement" for its sale and and transition of management to its lenders.
In a press release, Red Lobster said it "intends to use the proceedings to drive operational improvements, simplify the business through a reduction in locations, and pursue a sale of substantially all of its assets as a going concern."
“This restructuring is the best path forward for Red Lobster. It allows us to address several financial and operational challenges and emerge stronger and re-focused on our growth," said Red Lobster CEO Jonathan Tibus.
"The support we’ve received from our lenders and vendors will help ensure that we can complete the sale process quickly and efficiently while remaining focused on our employees and guests.”
Red Lobster, which was founded in 1968, is headquartered in Orlando, Florida, and by 2020 operated at over 700 locations around the world. Global seafood group Thai Union acquired a 49% stake of the restaurant chain in 2020.
In January, Thai Union withdrew its investment in Red Lobster, citing the COVID-19 pandemic, "sustained industry headwinds, higher interest rates and rising material and labor costs" as among its reasons for ending its involvement, making a loss of $530 million.
However, according to reports by CNN and other US media outlets, Red Lobster attributes some of the blame to Thai Union. In its publically-available bankruptcy filing, Red Lobster makes reference to a series of decisions by former interim CEO Paul Kenny, who it says was brought in "At the direction of Thai Union".
According to the bankruptcy filing, Red Lobster claims that Kenny imposed menu changes featuring Thai Union shrimp which led to operational challenges and increased costs for the restaurant chain. In its filing, the company also claims that "Thai Union exercised an outsized influence on the Company’s shrimp purchasing" and states that "Debtors are investigating whether Mr. Kenny’s decision-making process circumvented the Company’s normal supply chain and demand planning processes."